Economic Week In Review | Issue 480 | 19 May 2025

UK construction and property

• Regional relocation | The government announced the closure of 11 of its offices in central London and the relocation of thousands of civil servants to 13 regions outside London. Its central London real estate is expected to fall by almost 55%.
• Profit warnings | The latest Profit Warnings report from EY-Parthenon states that 22% of the listed construction and materials companies in the UK market have issued a profit warning in 2025. Five were issued in the first quarter.
• Green belt protections | London Mayor Sadiq Khan announced that he will explore releasing parts of the greenbelt for housing and industrial use. A consultation will be completed as part of the next London Plan, distinguishing between Metropolitan Open Land and greenbelt to protect the former from greenbelt reviews. The new London Plan is due to be adopted in 2028.
• Amortised grant funding model | Following a report by Housing Today and the G15 group of housing associations, the Ministry of Housing, Communities and Local Government and Treasury officials are discussing amortised grants with housing associations. Under the model, housing associations would receive a higher amount of development grant per unit upfront, reducing the amount they would need to borrow privately to meet the development costs. The advantage for the Treasury is that when the grant is paid back, it can be classified as an investment instead of debt or expense to the taxpayer. Along with amortised grants, the report also called for affordable housing to be reclassified as national infrastructure.
• Scaffolding training | The Construction Industry Scaffolders Record Scheme (CISRS) launched a programme of reforms to modernise training provision and expand opportunities for young people entering the scaffolding trade. Key measures include the creation of a new Quality Committee to oversee standards, expand training capacity, and review approved centres. A revised centre specification will be introduced on the 1st of June 2025, making it easier for providers to offer flexible, enclosed training. The changes will also reduce minimum height requirements for training rigs, which CISRS said would improve accessibility, especially in urban and rural locations with space or cost constraints. Further support measures will be confirmed later this year.
• Construction output Increased slightly for the second month in a row, encouraged by warmer weather. New work, and repair and maintenance helped total output increase by 0.5% in March, following a 0.2% rise in February after January’s 0.3% fall. In March, new work grew by 0.6%, while repair and maintenance grew by 0.4%. The ONS said that within new work, private housing and infrastructure work were the biggest drivers of growth. However, amid the current geopolitical climate and the UK’s economic outlook, investors remain cautious, coupled with the news of the government’s plan to tighten the rules for skilled work visas, which could intensify the worker shortage in the country, potentially leading to delays in building completion.
• Electricians | JTL – a charity that delivers apprenticeships in electrical and plumbing trades – has reported that its model warns the workforce could shrink by a further 32% by 2038. The electrical workforce has declined by more than a quarter since 2018, falling from 214,000 to just 158,000 electricians in 2024. It calls for national apprenticeship targets to be introduced and for funding reforms. Despite a recent uptick in apprenticeship starts (currently at 7,540 per year), current numbers are not sufficient to replace those leaving, with more than 10,500 starts needed. The full report is available here.

Global economy

• Bilateral trade deals | The World Trade Organisation (WTO) has warned that bilateral trade deals between the US and other countries could be a threat to the organisation’s core principles of trade equality. The WTO’s chief said that global trade was in crisis despite the recent de-escalation. The organisation’s studies show that fragmentation in trade could cause a 7% drop in global GDP.
• European rates | Belgium’s central bank governor suggested to the Financial Times that the European Central Bank (ECB) may need to lower the cost of borrowing to “slightly below” 2% to counter any downside risks to the rate of inflation. The ECB has lowered its central rate seven times from a peak of 4% in June to 2.25%. Its next meeting is on 5^th The European Commission expects consumer price growth to slow to 2% by mid-2025, and average 1.7% in 2026 due to lower energy prices, excess Chinese goods and a strengthening euro.

UK economy

• Growth | The UK’s economy grew by 0.7% in the first quarter of 2025, the fastest pace in a year. The figure was above the expected rate of 0.6% and much improved from the 0.1% seen at the end of 2024. Growth was driven by services and an increase in investment, as well as increased trade as businesses tried to get ahead of potential tariffs.
• Defaults | The ONS reported that a record proportion of British households were unable to pay their energy bills by direct debit in April due to a lack of funds. More than 2.7% of payments defaulted, much higher than the 0.9% rate seen before the energy crisis. Data has only been collected since 2019. General loan defaults increased to nearly 3.9%.
• Job market | Britain’s job market showed further signs of a slowdown, according to data published by the ONS. Employment fell by 33,000 in April after a 47,000 drop in March. Vacancies fell by 42,000, dropping further below their pre-Covid level. Growth in wages cooled, with average weekly earnings (excluding bonuses) rising by 5.6% in the first three months of 2025 compared to the same period last year, the slowest increase since the three months to November last year. Economists said the figures reflected concerns among employers about tax increases and the trade war.

Materials, commodities and currencies

• Low-carbon bricks made from construction waste have been approved for use by the British Board of Agrément (BBA), a UK construction products certification body. Scottish firm Kenoteq developed the K-Briq which uses gravel, mortar and plasterboard and is made up of almost 100% recycled waste from construction and demolition. It contains less than 20g of CO2 equivalent per unit and requires no firing, and Kenoteq hopes to increase production to two million bricks a year with ambitions of four million in the coming years. The process takes less than 24 hours and is up to three times faster than traditional methods.
• Iron ore prices have fallen following weaker-than-expected economic data from China and steelmaking expectations fall. Research agency BMI expects that prices will average $100/tonne this year, as subdued demand continues. Iron ore with 62% iron content at Qingdao port is averaging $95/tonne.
• Currency | The US dollar has fallen by 6% against a basket of currencies since the beginning of the year as the trade war has escalated. The US president has commented that the fall is a benefit to the US, as it could boost US manufacturing. For the rest of the world, a weakening dollar makes US exports more attractive, as well as a wealth of commodities that are traded in dollars.
• Copper | The threat of US tariffs on copper has encouraged an increase in exports to the US so that suppliers can get ahead of any additional costs. According to analysts at Morgan Stanley, US imports of refined copper have increased to 40,000 tons in late March from 14,000 tons per week, and inventories have risen by 81% since the start of the year to reach an eight-year high.

Environment

• Recycling | Global recycling rates have fallen for an eight consecutive year according to the Circle Economy Thinktank. Just 7% of the 106bn tonnes of materials used globally every year come from recycled materials, a 2.2% fall from a decade ago.
• Energy efficiency | The Department for Energy, Security and Net Zero (DESNZ) confirmed allocations under the latest phase of the Public Sector Decarbonisation Scheme (PSDS), which funds measures such as heat pumps, solar panels, insulation, and double glazing. The government allocated more than £630 million for upgrades to cut energy bills for public buildings. Phase four of the PSDS will see £940 million allocated in total, with further allocations due to be announced over the next few weeks.
• Water warnings | Millions of UK households have been warned of the risk of water restrictions, as parts of the country experience the driest start to the year for nearly a century. The Environment Agency has said there are no hosepipe bans currently planned but warned that water companies might have to implement restrictions in the months ahead if the weather stays dry. This weather marks a change after England endured the wettest 12 months from October 2022 to September 2023, causing flooding and leaving farmers struggling to get crops into the ground.